High court to rule on redevelopment appeal

$1.7 billion at stake between cities, state

A trolley is stopped at the Santee Trolley Square Town Center on Thursday, Jan. 20, 2011. The trolley station is an example of a civic project that was built with money from a redevelopment agency. ( Photo by K.C. Alfred/The San Diego Union-Tribune)

A trolley is stopped at the Santee Trolley Square Town Center on Thursday, Jan. 20, 2011. The trolley station is an example of a civic project that was built with money from a redevelopment agency. ( Photo by K.C. Alfred/The San Diego Union-Tribune)

Redevelopment by the numbers

$1.7 billion -- amount to be diverted from redevelopment agencies statewide in fiscal year 2012 for schools and other programs, with payments set to start Jan. 15

$144.2 million -- portion of the $1.7 billion that would come from redevelopment agencies in San Diego County

404 -- redevelopment agencies and project areas statewide

17 -- such agencies and project areas in San Diego County

The state Supreme Court agreed Thursday to hear a lawsuit challenging two laws that would shift $1.7 billion in the coming year — and hundreds of millions each subsequent year — from redevelopment agencies to schools and other programs.

It also ordered the redevelopment agencies not to sign new contracts or approve new debt pending a final ruling, which it promised to issue by Jan. 15. That leaves a range of proposed projects, from a ballpark to new roads to school expansions, on hold for at least several more months.

The court’s action appears to have no immediate effect on school budgets because the first diversion of redevelopment money isn’t due until mid-January anyway. Local school officials said they’re counting on those dollars because California’s finances remain shaky; they’re concerned about having to make more cuts by year’s end if incoming revenue for Sacramento falls below projections.

The Legislature, at Gov. Jerry Brown’s urging, had passed two bills in June that gave local cities a choice: disband redevelopment agencies, with their tax funds then dispersed locally, or retain them but hand over 40 percent of tax revenues for this fiscal year and 10 percent annually thereafter.

The League of California Cities and the California Redevelopment Association filed suit to overturn the laws.

“We’re gratified that the California Supreme Court has agreed to take our case, issued the stay we requested to preserve the status quo and that it is moving forward on an expedited basis,” said Chris McKenzie, executive director for the league of cities.

H.D. Palmer, spokesman for the state Department of Finance, welcomed the quick review schedule as well.

“As we’ve said from the beginning, we are confident the state is on solid legal footing,” he said.

City and redevelopment officials also predicted their argument will prevail in the legal arena. They said the California Constitution bans the state from abolishing redevelopment agencies and that Proposition 22, which voters approved last year, prohibits the state from diverting certain local taxes for schools, public safety and other services.

Mayors and city managers said redevelopment dollars are crucial for removing blight and stimulating local economic growth.

Brown, who supported redevelopment when he was the mayor of Oakland, has in recent months questioned the effectiveness of redevelopment agencies and said the state needs their money for higher priorities.

Jack Brandais, spokesman for the San Diego Unified School District, said the scheduled diversion of redevelopment funds is vital amid Sacramento’s continuing budget uncertainties.

“When things are as iffy as they are right now, (a reversal) is something that would concern us,” he said.

National City Mayor Ron Morrison said his city is “hanging in limbo” pending the court’s ruling. He still believes the state is robbing local funds, even if much of that money would go to local schools.

“It’s still theft. You’re still a thief,” Morrison said.

Several cities in San Diego County have agreed to the state’s terms. Now they have to reassess what to do with projects that were nearing final approval and funding but didn’t have all contracts signed before the two redevelopment bills became law.

About two dozen projects could be frozen until mid-January, said Jeff Graham, vice president of development at Centre City Development Corp., which covers downtown San Diego. They include a new home for the Monarch School for homeless children, a 205-unit apartment project on Cortez Hill and a two-tower project in East Village.

“We may not be able to approve those until the court acts,” Graham said. “Nothing is normal anymore.”

However, he said the court’s order seems to clear continued work on the $28.6 million first phase of the North Embarcadero Visionary Plan, the $8 million expansion of Horton Plaza Park and a new downtown fire station.

San Diego Mayor Jerry Sanders’ office hailed Thursday’s court announcement as a “good sign” that local cities have a chance to prevail. City Attorney Jan Goldsmith added: “The fact that the court took the case directly is good for everyone because it will provide a reliable decision without the delay of further appeals.”

In Escondido, Mayor Sam Abed said the ruling doesn’t change the city’s decision to hold off any further action on a proposed $50 million bond measure for a Triple A baseball stadium linked to the Padres. “Our priority has shifted from the ballpark to saving the redevelopment district,” he said.

Even if the court rules in the cities’ favor and Escondido is free to make a deal, Abed said, it remains to be seen if Padres CEO Jeff Moorad would wait that long to strike a deal.

“I’m sure if they’re still interested, they’ll come back to us,” he said.

The Chargers football team also hopes to tap some redevelopment funds, but it hasn’t submitted a formal request to help bring about an $800 million stadium in downtown San Diego. The only long-term financial commitment from the city includes $150 million for site development, not the facility itself, and those funds are contingent on the economy picking up and new projects being built downtown to generate the needed tax revenue.

Coronado is set to discuss the redevelopment situation Tuesday and Oceanside on Wednesday.

Kathy Baker, Oceanside’s redevelopment manager, said the court announcement means no payment will be due until there’s a definitive ruling.